Avoiding the most catastrophic impacts of climate change requires nearly a complete replacement of the world’s energy system. Although the timing and technology mix of this energy transition remain uncertain, it is clear that trillions of dollars in new investment will be needed for everything from wind- and solar-farms, to batteries and EV factories. This is far more than any government or international organization can spend, making the private sector critical to success. In this light, this module explores how policy can help the world to finance the energy transition by using the different financial instruments and institutions that exist.
We begin with an overview of the energy transition, diagnosing where money must be spent, what infrastructure is required, and how much it is likely to cost. A series of case studies will explore barriers to climate finance from the perspective of project developers, national governments, energy companies, financial firms, and multilateral development banks. The focus will then shift to how policies can overcome these barriers and incentivize private investment in clean energy infrastructure.
The module will be both bottom up, where students engage with financial models and project financing on a granular level, and also top-down, covering some of the different policy instruments that might accelerate clean energy financing such as carbon pricing, multilateral development bank reform, and national development plans. Students’ final assignment will involve using a financial model, and exploring how different policy interventions can be deployed to make investments more financially viable.